Trump is hitting Amazon where it hurts

President Trump is using the bully pulpit to break investors' faith in Jeff Bezos and Amazon.

With a series of broadsides against Amazon(AMZN) on Twitter and reports that he is raising the threat of antitrust lawsuits and tighter regulation, Trump has accomplished what Walmart(WMT), Target(TGT) and rivals have failed to do: slow down one of the most successful companies in American history.

Jeff Bezos has built Amazon into a 21st-century General Electric: A massive conglomerate with business units in multiple growing sectors of the economy. Amazon's founder and CEO has extended the company's reach from an online bookseller in the 1990s to a retailer, grocery store, cloud leader, movie studio, and voice assistant today. Bezos has become the world's richest person in the process.

Yet Amazon has fallen 7% and has lost close to $60 billion in market value since Axios reported last week that Trump wants to "go after" the company. Trump has taken shots at Amazon five times on Twitter since then. Amazon did not respond to request for comment.

Investors don't believe competitors can beat Amazon's model. But regulation or the courts could. That's where Trump is aiming his attacks.

"They pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.)," Trump said on Friday. "This Post Office scam must stop. Amazon must pay real costs (and taxes) now!" he tweeted Saturday.

His Amazon tweets make several misleading statements: Amazon collects sales tax in every state that charges one and remits it to the states. It also pays the post office to deliver packages to customers' doors.

Trump has escalated his attacks in part because of critical coverage of the White House by the Washington Post, which is owned personally by Amazon CEO Jeff Bezos.

But Trump is marshaling the same protectionist tactics to derail Amazon and boost its competitors that he used by slapping tariffs on imported steel and aluminum to prop up US manufacturers, said John Coffee, a professor of corporate governance at Columbia Law School. Both come at the expense of consumers, Coffee argued.

Increasing the rates Amazon pays to the Postal Service wouldn't cripple the company, said RJ Hottovy, an analyst at Morningstar. Amazon could be forced to raise fees for Prime memberships or to third parties that sell products on the website.

Raising postal fees could actually be counterproductive, he said. Amazon might choose to rely less on the Postal Service and small businesses could lose a crucial revenue channel.

The government must show that Amazon hurt consumers or limited competition through predatory practices.

Consumers aren't directly harmed from low prices and Amazon's "war of cost cutting," said Christopher Sagers, a law professor at Cleveland State University. But one antitrust theory against Amazon could focus on suppliers.

"Amazon has made itself so desirable that suppliers have to sell to them at lower prices," Sagers said. If Amazon is using its powers to squeeze suppliers, that could harm consumers by reducing the quality of products, discouraging innovation and leading to suppliers selling fewer products.

Even if Amazon does face stricter regulation or an antitrust case, it could continue to succeed.

Shareholders, convinced of Bezos' vision and Amazon's ability to keep growing, have gobbled up the stock despite the company's often secondary mission to turn a profit. Amazon attempts to undercut rivals by offering lower prices.

"He's almost alone with Steve Jobs and Bill Gates in this rare generation of founders who were able to predict the future," said Brad Stone, a senior executive editor at Bloomberg Technology and author of "The Everything Store: Jeff Bezos and the Age of Amazon."

Amazon has been able to pour money into new investments and technology and bulldoze over competition because investors have bought into the plan Bezos first laid out in his 1998 shareholder letter: "We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability consideration," he told investors 20 years ago.

Amazon's expensive price tag isn't a concern for investors either. Shareholders are willing to pay $222 for every $1 of earnings. The average price to earnings ratio for S&P 500 companies is under 20.

"There's a certain audience that will pay a premium for growth," Hottovy said.

Bezos takes risks and experiments in ways that would look puzzling for other companies. Investors cheer when Amazon enters a new industry or region because it means another way for Amazon to take market share from competitors and grow sales.

"Bezos and Amazon have proved themselves able to mint new businesses," Stone said.